By Kelsie Hoitomt
The White House blog shared what people need to know about the recent tax agreement that took part as of the first of the year.
This is the first time in twenty years that a bipartisan agreement has increased tax rates on the wealthy and keeps income taxes low for the middle class.
The agreement passed permanently extends the middle-class tax cuts and also extends credit for working families. It provides additional measures to protect families and promote economic growth.
The lower tax rates, an expanded Child Tax Credit and marriage penalty relief will provide certainty for 114 million households and together will prevent the typical family of four from seeing a $2,200 tax increase.
This agreement also prevents two million people from losing unemployment insurance benefits in January by extending emergency UI benefits for one year.
The agreement avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year.
Tax credits that encourage the production of clean domestic energy, such as the Production Tax Credit, will be extended through the end of the year. And businesses will get to immediately write off 50 percent of capital investments made next year, helping to create jobs in manufacturing and other sectors.
The deal also postpones the sequester for two months, which will give Congress time to work on a balanced plan to prevent the automatic spending cuts that would threaten our national security and slash investments that build our economy.
The postponement is paid for with $1 of revenue for every $1 of spending with the spending balanced between defense and domestic. The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and non-defense.
According to a CNN Economy Watch report, the average American household’s tax bill will increase by $1,250 or $25 a week. This figure is based on the idea that the “average” household income falls in the range of $75,000 to $100,000 a year.
It is said that without a deal, taxes would have jumped by more than $500 billion in 2013 as almost every tax cut enacted since 2001 was set to expire. This would have cost the average household almost $3,500 per year or about $67 a week, according to the Tax Policy Center.